Page 131 - DMGT521_PROJECT_MANAGEMENT

Project Management

Notes  Externalities are non-cash or benefits which an organization suffer or get if it starts the
project.

 With shadow price, we know the effect of using one more unit of resources on the social
cost and benefits.
 UNIDO approach is one of the methods of calculating Social cost benefit analysis.

 The financial institutions already represented in India also constantly strive to attain
competitive advantage over one another.
 Financial institutions face challenges relative to preserving the safety and soundness of
the institution and its ability to manage earnings and capital.
 In addition to direct acts of fraud and abuse, financial institutions often become the
instruments of money launders and illegal charitable contributions to terrorist.

8.6 Keywords

Business Continuity Risks: The institution’s ability to adequately prepare and execute its
responsibilities during a disaster.
Compliance: The risk to earnings or capital arising from violations or, non-compliance with
prescribed practices or ethical standards. For example Poorly configured or incompatible internal
and external systems and processes.
Foreign Exchange Regulations Factor: Sometime, we have to deal at currency rate which is less
than actual market rate due to regulation on FOREX. So, we should analyze this point also.

Information Integrity Risks: Information must be available, accurate, complete, valid and secure.
Rationing Factor: It means some of raw material prices are controlled by Govt. So, it may
increase our project cost but its social benefit will go to poor community.

Regulation for Providing Minimum Wage Factor: It also affects social cost and benefits of any
project. Because company must have to pay this minimum wages.
Reputation: The risk to earnings or capital arising from negative public opinion.

Strategic Risks: The risks to earnings or capital arising from adverse business decisions or
improper implementation of those decisions.
Transaction Risks: The risks to earnings or capital arising from problems with service or product
delivery.
UNIDO Approach: It is one of the methods of calculating Social Cost Benefit Analysis (SCBA).
Vendor Management Risks: The risk that the service provider will not perform the contract
terms and conditions as specified causing undesirable consequences for the institution’s
operations.

8.7 Review Questions

1. Explain rationale for Social Cost Benefit Analysis.

2. Describe about Market Imperfection.
3. Discuss UNIDO approach for Social Cost Benefit Analysis.
4. What do you know about shadow pricing and sources of shadow pricing?

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